TIDMMOY 
 
RNS Number : 6913X 
Moydow Mines International Inc 
19 August 2009 
 

 
 
 
 
 
 
 
 
 
 
Second Quarter 
 
 
Interim Report 
 
 
Management's Discussion and Analysis of Financial Condition and 
Operating Results 
 
 
Three Months Ended June 30, 2009 
 
 
 
 
 
 
 
 
 
 
 
 
Toronto Office 
Suite 1220, 20 Toronto Street 
Toronto, Ontario M5C 2B8 
Tel : (416) 703-3751 
Fax : (416) 367-3638 
E-mail : info@moydow.com 
 
 
 
 
Dublin Office 
74 Haddington Road 
Dublin 4, Ireland 
Tel : (353) 1-667-7611 
Fax : (353) 1-667-7622 
E-mail : info@moydow.com 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moydow Mines International Inc. 
 
 
Management's Discussion and Analysis of Financial Condition and 
 Operating Results 
 
 
For Three Months Ended June 30, 2009 
 
 
INTRODUCTION 
 
 
General 
 
 
The interim Management's Discussion and Analysis ("MD&A") provides a detailed 
analysis of Moydow's business and compares its financial results for the second 
quarter ending June 30, 2009, with those for the corresponding quarter of 2008. 
In order to better understand the MD&A, it should be read in conjunction with 
the audited consolidated financial statements of the Company and notes thereto 
for the year ended December 31, 2008. The MD&A has been prepared as at August 7, 
2009. The consolidated financial statements have been prepared in accordance 
with Canadian generally accepted accounting principles. The reporting currency 
for the Company is the United States dollar, and all amounts in the following 
discussion are in United States dollars unless otherwise noted. The attached 
financial statements have not been reviewed by the Company's auditors. 
 
 
Company Overview 
 
 
Moydow Mines International Inc. ("Moydow" or the "Company") is an international 
exploration company with primary interests in precious and industrial minerals 
and diamonds. Exploration activities are focused principally in Africa. Moydow 
Mines' common shares are listed on both the Toronto Stock Exchange and the AIM 
Market of the London Stock Exchange (symbol "MOY"). For further information on 
the Company please visit our website at www.moydow.com or view our public 
filings on the SEDAR website at www.sedar.com. 
 
 
Subsidiaries and affiliated companies of Moydow are organized internationally so 
that each has a specific geographic area or mineral project interest. Moydow 
provides administrative, technical and financial assistance to these companies. 
 
 
Forward-Looking Statements 
 
 
This MD&A contains "forward-looking statements" that are subject to a number of 
known and unknown risks, uncertainties and other factors that may cause actual 
results to differ materially from those anticipated in our forward looking 
statements. Factors that could cause such differences include: changes in metal 
prices, equity markets, results of exploration and related expenses, drilling 
activity, sampling and other data, currency exchange rates, change in 
governments, ability to raise finances and changes to regulations affecting the 
mining industry. Such forward-looking statements involve known and unknown risks 
and uncertainties that could cause actual events or results to differ materially 
from estimated or anticipated events or results implied or expressed in such 
forward-looking statements. 
 
 
Disclosure Controls and Procedures ("DC&P") 
 
 
DC&P are designed to provide reasonable assurance that information required to 
be disclosed by the Company in reports filed with or submitted to various 
securities regulators is recorded, processed, summarized and reported within the 
time periods specified. This information is gathered and reported to the 
Company's management, including the Chief Executive Officer ("CEO") and Chief 
Financial Officer ("CFO"), so that timely decisions can be made regarding 
disclosure. 
 
 
The Company's management, under the supervision of, and with the participation 
of, the CEO and CFO, have commenced an assessment of the design and evaluation 
of the Company's DC&P, as required in Canada by "National Instrument - 52-109, 
Certification of Disclosure in Issuers' Annual and Interim Filings". This 
evaluation is expected to be completed in the third quarter of 2009. 
 
 
Internal Control over Financial Reporting ("ICFR") 
 
 
Designing, establishing and maintaining adequate ICFR is the responsibility of 
the Company's management. ICFR is will be designed and supervised by senior 
management, and effected by the Board of Directors, to provide reasonable 
assurance regarding the reliability of financial reporting and preparation of 
the Company's consolidated financial statements in accordance with Canadian 
GAAP. These controls will include policies and procedures that: pertain to the 
maintenance of records that, in reasonable detail, accurately and fairly reflect 
the transactions and dispositions of the assets of the Company; provide 
reasonable assurance that transactions are recorded as necessary to permit 
preparation of financial statements in accordance with Canadian GAAP, and that 
expenditures are being made only in accordance with authorizations of management 
of the Company. They will also provide reasonable assurance regarding prevention 
or timely detection of unauthorized acquisition, use or disposition of the 
Company's assets that could have a material effect on the annual financial 
statements or interim financial statements. 
 
 
Management is responsible for establishing and maintaining ICFR and is currently 
in the process of designing such controls to ensure that the required objectives 
of these internal controls will be met. The Company will, on a continual basis, 
review and enhance its systems of controls and procedures. However, because of 
the inherent limitations in all control systems, management acknowledges that 
ICFR will not prevent or detect all misstatements due to error or fraud. 
 
 
Management do not expect that there were any deficiencies within the Company's 
existing internal controls over financial reporting, during the second quarter 
of 2009, that materially affected, or are reasonably likely to materially 
affect, the Company's ICFR. 
 
 
Application of Critical Accounting Estimates 
 
 
Moydow's accounting policies are described in Note 2 of the Consolidated 
Financial Statements at December 31, 2008. Set out below is a discussion of the 
application of Moydow's critical accounting policies that require the Company to 
make assumptions about matters that are uncertain at the time the accounting 
estimate is made, and where different estimates that could reasonably have been 
used in the current period, or changes in the accounting estimate that are 
reasonably likely to occur from period to period would have a material impact on 
Moydow's financial statements. 
 
 
Carrying value of mineral properties 
 
 
Acquisition costs of mineral properties, together with direct exploration and 
development expenses incurred thereon, are deferred and capitalized on a 
property by property basis. Upon reaching commercial production, these 
capitalized costs are transferred from exploration properties to producing 
properties on the consolidated balance sheets and are amortized into operations 
using the unit-of-production method over the estimated useful life of the 
estimated related ore reserves. 
 
 
In the event that the long-term expectation is that the net carrying amount of 
these capitalized exploration costs will not be recovered, the carrying amount 
is written down accordingly and the write-down amount charged to operations. 
Such would be indicated where: 
 
 
  *  Exploration activities have ceased; 
  *  Exploration results are not promising such that exploration will not be planned 
  for the foreseeable future; 
  *  Lease ownership rights expire; or 
  *  Insufficient funding is available to complete the exploration program. 
 
 
 
The amount shown for mineral properties represents costs incurred to date net of 
recoveries from option or joint venture participants and write-downs, and does 
not necessarily reflect present or future values. 
 
 
OVERVIEW OF EXPLORATION ACTIVITIES, cONTRACTUAL OBLIGATIONS AND COMMITMENTS 
 
 
Angola - Africa 
 
 
Dala project, Angola 
 
 
The Company is party to two separate exploration projects with the same partners 
on the Dala property in Angola, relating to the exploration for alluvial and 
kimberlite diamonds. 
 
 
Alluvial diamonds 
 
 
On October 1, 2004, the Company signed an agreement with Empressa Nacional De 
Diamantes De Angola (Endiama), the Angolan state diamond mining company and 
Cimader-Comercio Geral Limitada (Cimader), a local Angola company, to explore 
for alluvial diamonds on the Dala concession, located near the town of Saurimo, 
in north-east Angola. The concession comprises 3,000 square kilometres. The 
Company has a 33% interest, in the alluvial licence. The Company has applied to 
Endiama for the renewal of this licence. Cimader and Endiama have a free carried 
interest in the exploration phase of the project. 
 
 
The Company's cumulative expenditures on the alluvial licence to June 30, 2009, 
amounted to $nil million of which $nil million was incurred during 2009 ($0.23 
million was incurred during the first half of 2008). 
 
 
The alluvial licence expired on February 7, 2009, hence, the Company has written 
off all expenditures on this alluvial licence as December 31, 2008 in the amount 
of $5.361 million. 
 
 
Kimberlite 
 
 
On December 16, 2005, the Company signed another agreement with Endiama and 
Cimader to explore for kimberlite (primary) diamonds on the Dala concession. 
Under the terms of the agreement, the Company can earn 40% interest in the 
concession with the remaining percentages held by Endiama and Cimader. To obtain 
its interest, the Company will have to incur expenditures of not less than 
$10,000,000 on or before April 10, 2010. Cimader and Endiama have a free carried 
interest in the exploration phase of the project. The granting of the licence 
was ratified by the Angolan Council of Ministers on October 18th, 2006, and was 
subject to the Company making a deposit of $1 million with the Angolan 
government. The deposit was made in 2006 and may be refunded provided that 
Moydow meet certain conditions. The deposit has been included as a component of 
the cost to acquire an interest in the Dala project. 
 
 
The Company's cumulative expenditures on the kimberlite licence to June 30, 
2009, amounted to $7.18 million of which $0.18 million was incurred during the 
first half of 2009 (2008 - $1.01 million) and $0.03 million in the quarter ended 
June 30, 2009. The management of the Company have decided to write off all 
expenditures on this property in the sum of $7.18 million due to the 
extraordinary challenging times for the diamond industry and the global economic 
crisis together with concerns over the commercial viability of the mineral 
deposit which is dependent on a number of factors but in particular the 
particular attributes of the deposit, such as its size, grade and proximity to 
infrastructure. 
 
 
On April 21, 2008, the Company issued 4,000,000 shares to Concord Minerals LLC 
in connection with the acquisition of its interest in the Dala project, Angola. 
The common shares were issued at a price of CA$0.20 per share, in settlement of 
the cumulative expenditures incurred by Concord Minerals LLC on the Dala 
project, Angola of $0.73 million. 
 
 
 
 
Sierra Leone, West Africa 
 
 
Port Loko property, Sierra Leone 
 
 
On July 14, 2008, the Company entered into an agreement to sell its 50% interest 
in the Port Loko bauxite exploration licence in Sierra Leone to a private 
company for the purpose of accelerated development. The Company received a 
non-refundable upfront payment of $1.53 million, which has been offset against 
the mineral property carrying value. As the terms of the agreement were not 
fulfilled, the property reverts back to its original shareholding. The Company 
still holds a 50% interest in the Port Loko bauxite exploration project in 
Sierra Leone, West Africa. The other 50% interest in the project is held by 
Gondwana Investments Limited ("Gondwana"), a company incorporated in Luxembourg. 
 
 
On July 3, 2008, the Company was granted an extension to its prospecting licence 
by the Ministry of Mineral Resources in Sierra Leone until November 11, 2009. 
 
 
Cumulative expenditures by the Company to June 30, 2009, amounted to $2.14 
million, of which $0.20 million was incurred in first half of 2009, (2008 - 
$0.16 million) and $0.14 million in the quarter ended June 30, 2009, (2008 - 
$0.80 million). The non-refundable deposit has been offset against the mineral 
property carrying value. 
 
 
Ghana, West Africa 
 
 
Ntotoroso property, Ghana 
 
 
On December 8, 2003, the Company sold its wholly owned subsidiary, Moydow 
Limited (Isle of Man), which, following an internal restructuring, owned the 
Company's 50% joint venture interest in the Ntotoroso Property ("Property") but 
no other mineral properties, to Newmont Mining Corporation ("Newmont"). 
 
 
In connection with the sale, the Company entered into a royalty agreement, 
whereby the Company acquired the right to a net smelter return royalty of 2% on 
all recovered ounces of gold and silver produced from the Property after the 
first 1,200,000 gold equivalent ounces in consideration for $250,000. No value 
has been ascribed to the future royalty payments. 
 
 
At the time of sale, the reserve on the Property was calculated at 1,200,000 
ounces of gold. This figure was based on a gold price of $325 per ounce and 
assumed that only the Subika pit would be mined down to a depth of 150 metres. 
 
 
In March 2005, Newmont published public disclosure documents relating to the 
development of the Ahafo mine. These documents showed a newly calculated reserve 
on Subika of 2,460,000 ounces of gold and envisaged mining the pit to a depth of 
270 metres. In addition, the Awonsu pit, which is partly on the Property, is 
scheduled to start production during 2009. 
 
 
The project poured its first gold on July 18, 2006 and, as at June 30, 2009, had 
produced 785,461 ounces of gold of which 77,729 ounces of gold were produced in 
the second quarter of 2009 (2008 - 67,757 ounces). Assuming the same rate of 
production, we expect our first royalty payment in the fourth quarter of 2010. 
The Company expects annual royalty payments of up to $5 million based on current 
gold prices. 
 
 
Hwidem property, Ghana 
 
 
On February 13, 2007, the Company was granted a one-year extension to its 
prospecting licence with respect to the Hwidem property by the Minister for 
Lands, Forestry and Mines in Ghana. The licence area covers 24.7 square 
kilometres and it adjoins the Kenyase-Ntotoroso area currently under lease to 
Rank Mining Company Limited, a subsidiary of Newmont. The Company incurred 
exploration expenditures on this property of $0.06 million in the first half of 
2009 (2008-$0.02 million) and $0.04 million in the quarter ended June 30, 2009 
(2008 - $0.01 million). The minimum exploration expenditures required in order 
to maintain the licence are $0.52 million, of which $0.67 million had been spent 
as at June 30, 2009. 
 
 
Kanyankaw property, Ghana 
 
 
On March 10, 2008, the Company was granted a two-year extension to its 
prospecting licence with respect to the Kanyankaw property by the Minister for 
Lands, Forestry and Mines in Ghana. The carrying value of the Kanyankaw property 
was written off in 2005 in the amount of $0.33 million, as exploration results 
were not promising, such that exploration is not planned for the foreseeable 
future. 
 
 
On February 11, 2009, the Company granted Adamus Resources Limited ("Adamus") an 
option to acquire up to 100% interest in the Kanyankaw property, as follows: 
 
 
  *  Initial option fee of $10,000; 
 
 
 
  *  at any time during the option period of twelve months, Adamus shall have the 
  right to acquire a 75% interest in the prospecting licence in consideration for 
  a payment of AUD$150,000 or 250,000 shares in Adamus; and 
 
 
 
  *  within thirty days of a decision to mine at Kanyankaw, the Company may elect to 
  transfer its remaining 25% interest to Adamus in consideration for a 2% net 
  smelter royalty. 
 
 
 
Adamus is a Perth based mineral exploration company listed on the Australian 
Securities Exchange (ASX), TSX Venture Exchange (TSX-V) and Frankfurt Stock 
Exchange Open Market (FSE). 
 
 
Commitments and contingencies 
 
 
The Company, either directly or through certain joint ventures, has obligations 
to expend various amounts on its mineral properties and projects in order to 
keep its mineral property rights in good standing. All agreements are in the 
normal course of business. 
 
 
+---------------------------+--------------+---------------+--------------+ 
| Payments due ($ thousand) | Total        | Less than 1   | 1 to 3 years | 
|                           |              | year          |              | 
+---------------------------+--------------+---------------+--------------+ 
| Exploration and           | $-           | $-            | $-           | 
| development               |              |               |              | 
+---------------------------+--------------+---------------+--------------+ 
FINANCIAL SUMMARY 
 
 
Segmented Information 
 
 
The Company has one reportable operating segment, being exploration of mineral 
properties in geographic areas disclosed in Note 3 to the Consolidated Financial 
Statements as at December 31, 2008. 
 
 
Results of Operations 
 
 
Comprehensive loss for the quarter ended June 30, 2009, was $7.492 million or 
$0.124 per share compared to a loss of $0.389 million in the same period in 2008 
or $0.007 per share. 
 
 
During the quarter ended June 30, 2009, the management of the Company decided to 
write off all expenditures on the Kimberlite diamond property, Angola, in the 
sum of $7.183 million. The write-down was necessitated by the extraordinary 
challenging times for the diamond industry and the global economic crisis 
together with concerns over the commercial viability of the mineral deposit 
which is dependent on a number of factors together with concerns over the 
particular attributes of the deposit, such as its size, grade and proximity to 
infrastructure. 
 
 
General and administrative expenses were $0.257 million during the second 
quarter of 2009 as compared with $0.284 million in the same period of 2008. 
On July 13, 2007, the Company granted 3.3 million stock options to officers, 
directors, employees and consultants. The estimated fair value of the options 
granted during the three months ended June 30, 2008 was $0.024 million. The 
Company recognizes this expense over the period in which entitlement to the 
awards vest. 
 
 
The foreign exchange loss for the quarter ended June 30, 2009, was $0.009 
million compared to a gain of $0.013 million in the same period of 2008. The 
foreign exchange gain resulted from the movements in exchange rates between 
operating currencies and the United States dollar. 
 
 
On February 11, 2009, the Company granted Adamus Resources Limited ("Adamus") an 
option to acquire up to 100% interest in the Kanyankaw property. Part of the 
transaction included a non-refundable option fee of $0.010 million. 
 
 
A company controlled by certain insiders of the Company advanced money to the 
Company and interest has been accrued at Libor plus 2%. The amount of interest 
charged to the Company during the quarter ended June 30, 2009 and 2008 was 
$0.053 million and $0.122 million, respectively. 
 
 
The Company had an unrealised loss of $0.001 million and $0.001 million in the 
second quarter of 2009 and 2008, respectively on financial assets 
held-for-trading. 
 
 
The Company's revenues are derived from: interest which is dependent on 
available cash balances and prevailing interest rates and returns on investments 
which are dependent on the prevailing market at the time of sale. 
 
 
As at June 30, 2008, the Company recorded an income tax recovery in the sum of 
$0.029 million. 
 
 
Comprehensive losses for the six months ended June 30, 2009, were $7.835 million 
or $0.129 per share compared to a loss of $0.770 million in the same period in 
2008 or $0.013 per share. 
 
 
During the quarter ended June 30, 2009, the management of the Company decided to 
write off all expenditures on the Kimberlite diamond property, Angola, in the 
sum of $7.183 million. The write-down was necessitated by the extraordinary 
challenging times for the diamond industry and the global economic crisis 
together with concerns over the commercial viability of the mineral deposit 
which is dependent on a number of factors together with concerns over the 
particular attributes of the deposit, such as its size, grade and proximity to 
infrastructure. 
 
 
General and administrative expenses were $0.543 million during the first six 
months of 2009 as compared with $0.575 million in the same period of 2008. 
 
 
On July 13, 2007, the Company granted 3.3 million stock options to officers, 
directors, employees and consultants. The estimated fair value of the options 
granted during the six months ended June 30, 2008 was $0.047 million. The 
Company recognizes this expense over the period in which entitlement to the 
awards vest. 
 
 
The foreign exchange loss in the first six months of 2009 was $0.012 million 
compared to a gain of $0.009 million in the same period of 2008. The foreign 
exchange gain resulted from the movements in exchange rates between operating 
currencies and the United States dollar. 
 
 
On February 11, 2009, the Company granted Adamus Resources Limited ("Adamus") an 
option to acquire up to 100% interest in the Kanyankaw property. Part of the 
transaction included a non-refundable option fee of $0.010 million. 
 
 
A company controlled by certain insiders of the Company advanced money to the 
Company and interest has been accrued at Libor plus 2%. The amount of interest 
charged to the Company during the six months ended June 30, 2009 and 2008 was 
$0.108 million and $0.177 million, respectively. 
 
 
The Company had an unrealised gain of $0.001 million and loss of $0.007 million 
in the first half of 2009 and 2008, respectively on financial assets 
held-for-trading. 
The Company's revenues are derived from: interest and dividend income, which is 
dependent on available cash balances and prevailing interest rates and returns 
on investments which are dependent on the prevailing market at the time of sale. 
 
 
As at June 30, 2008, the Company recorded an income tax recovery in the sum of 
$0.029 million. 
 
 
Liquidity and Capital Resources 
 
 
At June 30, 2009, the Company had negative working capital of $8.175 million 
(December 31, 2008 - $7.078 million). Cash and cash equivalents at June 30, 
2009, amounted to $0.104 million compared to cash and cash equivalents as the 
end of 2008 of $0.147 million. 
 
 
A company controlled by certain insiders of the Company advanced money to the 
Company and interest has been accrued at Libor plus 2%. The amount of interest 
charged to the Company during the three months ended June 30, 2009, and 2008 was 
$0.053 million and $0.122 million, respectively. Included in accounts payable 
and accrued liabilities as at June 30, 2009, is $7.868 million (2008 - $5.570 
million) payable to these related parties. Moydow has reached agreement with 
this related party, whereby they will continue to fund the Company in the future 
and will not demand repayment of the monies advanced until Moydow has sufficient 
income stream, principally from the Ntotoroso royalty. Moydow has not pledged 
any of its assets against this debt and no guarantees have been entered into. 
The Company feels that the shareholders interest are been protected by this 
related party funding rather than raising money through a rights issue in these 
turbulent economic times and diluting shareholders. The rate of interest being 
charged at Libor plus 2% is far more favourable than raising third party debt 
and pledging the Company's assets. 
 
These financial statements have been prepared using Canadian generally accepted 
accounting principles applicable to a going concern, which contemplates the 
realization of assets and settlement of liabilities in the normal course of 
business as they come due. As at June 30, 2009, the Company had an excess of 
current liabilities over current assets of $8.175 million and has recorded 
losses and net cash outflows from operations for the past three years. The 
Company will have to secure additional financing to meet its required 
commitments. These circumstances lend substantial doubt as to the ability of the 
Company to meet its obligations as they come due and, accordingly, the 
appropriateness of the use of accounting principles applicable to a going 
concern. 
 
 
In recognition of these circumstances, the Company is exploring various 
initiatives to secure capital so that Moydow can continue as a going concern. It 
is not possible to determine, with any certainty, the success, adequacy or 
sufficiency of these initiatives. 
 
 
Cash Flow Statements 
 
Cash flow provided by operating activities for the quarter ended June 30, 2009, 
including changes in non-cash working capital of $0.551 million, totalled $0.243 
million as compared to cash flow provided by operation activities of $1.369 
million in the same period in 2008. In the quarter ended June 30, 2009, cash 
used in investing activities was $0.216 million which (2008 - $1.788 million) 
was expended on exploration of mineral properties incurred principally in Angola 
and Sierra Leone. Cash flow from financing activities for the quarter ended June 
30, 2009 and 2008 was $nil and $0.797 million, respectively. 
 
 
On April 21, 2008, the Company issued 4,000,000 common shares to Concord 
Minerals LLC in connection with the acquisition of its interest in the Dala 
property in Angola. The common shares were issued at a price of Cdn$0.20 per 
common share, in settlement of the cumulative expenditures incurred by Concord 
Minerals LLC on the Dala property of $0.728 million. 
 
 
Cash flow provided for operating activities for the six months ended June 30, 
2009, including increases in non-cash working capital of $1.054 million, 
totalled $0.402 million as compared to cash flow provided for operating 
activities of $1.969 million in the same period of 2008. During the six months 
ended June 30, 2009 and 2008, cash used in investing activities was $0.445 
million and $2.435 million, respectively, which was expended on exploration of 
mineral properties, principally on the Dala diamond project in Angola and Port 
Loko bauxite property in Sierra Leone. 
 
 
Cash flow from financing activities for the six months ended June 30, 2009 and 
2008, was $nil and $0.80 million, respectively, reflecting in 2008, the issue of 
4,000,000 common shares to Concord Minerals LLC in connection with the 
acquisition of its interest in the Dala property. 
 
 
Selected Consolidated Annual Financial Information 
 
 
Set forth below is certain financial data for the last three completed financial 
years: 
 
 
 
See attached file: MD&A Quarterly Information Summary.pdf 
 
 
http://www.rns-pdf.londonstockexchange.com/rns/6913X_-2009-8-19.pdf 
 
 
Outstanding Share Data 
 
 
As at July 16, 2009, the Company has 60,572,904 common shares in issue. Holders 
of common shares are entitled to one vote on any ballot at meetings in respect 
of each common share held. The Company has 4,900,000 stock options outstanding 
at a weighted average price of Cdn$0.27. On August 13, 2009, 1,600,000 stock 
options expire at an exercise price of Cdn$0.33. 
 
 
 
 
 
 
Transactions with Related Parties 
 
 
Related party transactions relate primarily to the payment of fees under 
contracts for services with companies in which a Moydow director is a 
shareholder and director. The Company was charged during the quarter ended June 
30, 2009, a total of $0.08 million (2009 - $0.07 million) with respect to 
administration services. 
 
 
The Company's primary legal counsel is a firm in which a director of the Company 
is a partner. The Company was charged $0.01 million during the second quarter of 
2009 (2008 - $0.05 million) for legal services provided by this firm. 
 
A company controlled by certain insiders of the Company advanced money to the 
Company and interest has been accrued at Libor plus 2%. The amount of interest 
charged to the Company during the second period 2009 was $0.05 million (2008 - 
$0.12 million). Included in accounts payable and accrued liabilities as at June 
30, 2009 is $7.87 million (2008 - $5.57 million) payable to these related 
parties. 
 
 
Use of Financial Instruments 
 
 
The Company has not entered into any specialized financial agreements to 
minimize its investment risk, currency risk or commodity risk. There are no 
off-balance sheet arrangements. 
 
 
Changes in Accounting Policies 
 
 
On January 1, 2007, the company adopted the CICA Handbook Section 1506, 
Accounting Changes, which prescribes the criteria for changing accounting 
policies, together with the accounting treatment and disclosure of changes in 
accounting policies, changes in accounting estimates and corrections of errors. 
This standard did not affect the Company's financial position or results of 
operations. 
 
Section 1535 
 
The new Section 1535, Capital Disclosures, requires that an entity disclose 
information that enables users of its financial statements to evaluate an 
entity's objectives, policies and processes for managing capital, including 
disclosures of any externally imposed capital requirements and the consequences 
of non-compliance. The new standard applies to interim and annual financial 
statements relating to fiscal years beginning on or after October 1, 2007, 
specifically January 1, 2008 for the Company. 
 
 
This standard has impacted the Company's disclosures provided but will not 
affect the Company's results or financial position. 
 
Section 3031 
 
 The new Section 3031, Inventories, relates to the accounting for 
inventories and revises and enhances the requirements for assigning costs to 
inventories. The new standard applies to interim and annual financial statements 
relating to fiscal years beginning on or after January 1, 2008, and was 
effective for the Company as of this date. 
 
 
This standard has not had a significant impact on the Company's consolidated 
financial statements. 
 
 
Sections 3862 and 3863 
 
The new Sections 3862, Financial Instruments Disclosure and 3863, Financial 
Instruments-Presentation replace Section 3861 Financial Instruments, Disclosure 
and Presentation, revising and enhancing its disclosure requirements. These new 
sections place increased emphasis on disclosures about the nature and extent of 
risks arising from financial instruments and how the entity manages those risks. 
The new standards apply to interim and annual financial statements relating to 
fiscal years beginning on or after October 1, 2007, specifically January 1, 
2008, for the Company. 
These standards have impacted the Company's disclosures but did not affect the 
Company's results or financial position. 
 
 
Future Accounting Changes 
 
 
Section 3064 
 
 
The new Section 3064, Goodwill and Intangibles Assets, ensures that intangible 
assets meet the definition of an asset, and eliminates the "matching' principle 
whereby certain costs were being deferred and expensed to match with revenue 
earned. The new standard applies for interim and annual financial statements for 
years beginning on or after October 1, 2008. 
 
 
The standard is not expected to have a significant impact on the Company's 
consolidated financial statements. 
 
 
Section 1582 
 
 
The new section 1582, Business Combinations, which replaces Section 1581, 
Business Combinations, establishes standards for the measurement of a business 
combination and the recognition and measurement of assets acquired and 
liabilities assumed. The new standard applies to business combinations for which 
the acquisition date is on or after the beginning of the first annual reporting 
period beginning on or after January 1, 2011. Earlier application is permitted. 
 
 
The Company is currently assessing the impact of the adoption of this new 
standard on its consolidated financial statements. 
 
 
Section 1601 and Section 1602 
 
 
The new Section 1601, Consolidated Financial Statements and Section 1602, 
Non-Controlling Interests, together replace Section 1600, Consolidated Financial 
Statements. Section 1601 establishes standards for the preparation of 
consolidated financial statements. Section 1602 establishes the accounting for a 
non-controlling interest in a subsidiary, in the consolidated financial 
statements, subsequent to a business combination. These standards apply to 
interim and annual consolidated financial statements relating to fiscal years 
beginning on or after January 1, 2011. Earlier adoption is permitted as of the 
beginning of a fiscal year. 
 
 
The Company is currently assessing the impact of the adoption of these new 
standards on its consolidated financial statements. 
 
 
International Financial Reporting Standards 
 
 
In 2006, the Canadian Accounting Standards Board ("AcSB") published a new 
strategic plan that will significantly affect financial reporting requirements 
for Canadian companies. The AcSB strategic plan outlines the convergence of 
Canadian GAAP and IFRS over an expected five year transitional period. In 
February 2008 the AcSB announced that January 1, 2011 is the changeover date for 
publicly-listed companies to use IFRS, replacing Canadian GAAP, affecting 
interim and annual financial statements relating to fiscal years after this 
time. The transition date of January 1, 2011 will require the restatement for 
comparative purposes of amounts reported by the Company for the year ended 
December 31, 2010. 
 
 
To transition to IFRS, the Company must apply "IFRS 1 - First Time Adoption of 
IFRS" which set out the rules for first time adoption. In general, IFRS 1 
requires an entity to comply with each IFRS effective at the reporting date for 
the entity's first IFRS financial statements. This requires that an entity apply 
IFRS to its opening IFRS balance sheet as at January 1, 2010 (i.e.: the balance 
sheet prepared at the beginning of the earliest comparative period presented in 
the entity's first IFRS financial statements). 
 
 
Within IFRS 1 there are exemptions, some of which are mandatory and some of 
which are elective. The exemptions provide relief for companies from certain 
requirements in specified areas when the cost of complying with the requirements 
is likely to exceed the resulting benefit to users of financial statements. IFRS 
1 generally requires retrospective application of IFRSs on first-time adoptions, 
but prohibits such application in some areas, particularly when retrospective 
application would require judgments by management about past conditions after 
the outcome of a particular transaction is already known. 
 
 
On transition, management must apply the mandatory exemptions and make the 
determination as to which elective exemptions will be made under IFRS 1. 
 
 
Management intends to assess the impact that IFRS will have on the aspects of 
the business including accounting policy, financial reporting, information 
technology and communications perspective. Management will also be reviewing the 
Company's accounting systems and assessing the changes that will be required and 
the strategies that will be employed. Communication and training strategies will 
also be developed. 
 
 
A team will be set up to manage this transition and to ensure successful 
implementation within the required time frame. The Company will provide 
disclosures of the key elements of our plan and progress on this transition as 
the information becomes available during the transition period. 
 
 
Regulatory, Environmental and Other Risk Factors 
 
 
An investment in the securities of the Company is subject to a number of risks. 
In addition to the other information contained in this MD&A and the Company's 
other publicly filed disclosure documents, investors should give careful 
consideration to the following factors, which are qualified in their entirety by 
reference to, and must be read in conjunction with, the detailed information 
appearing elsewhere in this MD&A. Any of the matters highlighted in these risk 
factors could have a material adverse effect on the Company's business prospects 
or financial condition. 
 
 
The Company intends to fulfil all statutory commitments on its current licences 
over the next year and to apply for licence renewals in the normal course of 
business. 
 
 
Exploration Risks 
 
 
Exploration is speculative in nature, involves many risks and is frequently 
unsuccessful. Any exploration program entails risks relating to the location of 
economic ore bodies, development of appropriate metallurgical processes, receipt 
of necessary governmental approvals and construction of mining and processing 
facilities at any site chosen for mining. The commercial viability of a mineral 
deposit is dependent on a number of factors including the price, exchange rates, 
the particular attributes of the deposit, such as its size, grade and proximity 
to infrastructure, as well as other factors including financing costs, taxation, 
royalties, land tenure, land use, water use, power use, importing and exporting 
gold and environmental protection. The effect of these factors cannot be 
accurately predicted. 
 
 
Political and Regulatory Risks 
 
 
The Company is conducting exploration activities mainly in Africa. There is no 
assurance that future political and economic conditions in Africa will not 
change or that the government may adopt less supportive policies respecting 
foreign development and ownership of mineral property. 
 
 
Changes in government policy may result in changes to laws affecting ownership 
of assets, mining policies, monetary policies, taxation, rates of exchange, 
environmental regulations, labour relations, repatriation of income and return 
of capital. This may affect both the Company's ability to undertake exploration 
and development activities in respect of present and future properties in the 
manner currently contemplated, as well as its ability to continue to explore and 
possible develop/operate those properties in which it has an interest or in 
respect of which it has obtained exploration rights to date. The possibility 
that future governments of these and other countries may adopt substantially 
different policies, which might extend to expropriation of assets, cannot be 
ruled out. 
 
 
Environmental Risks 
 
 
Environmental legislation is evolving in a manner which will require stricter 
standards and enforcement, increased fines and penalties for non-compliance, 
more stringent environmental assessments of proposed projects and a heightened 
degree of responsibility for companies and their officers, directors and 
employees. There can be no assurance that future changes to environmental 
regulation, if any, will not adversely affect the Company's operations. 
Environmental hazards may exist on the properties in which the Company holds 
interests that have been caused by previous or existing owners or operators. 
 
 
Compliance with environmental, reclamation, closure and other requirements may 
involve significant costs and other liabilities. The EPA has broad powers under 
environmental assessment legislation to suspend, cancel or revoke an 
environmental permit or certificate in cases of non compliance with laws, 
permits, certificates and mitigation commitments in an EIA or environmental 
management plan. The EPA also may suspend a permit or certificate in the event 
of an occurrence of fundamental changes in the environment due to natural causes 
before or during the implementation of an undertaking. 
 
 
Calculation of Reserves and Metal Recovery 
 
 
There is a degree of uncertainty attributable to the calculation of reserves, 
mineralized material, and corresponding grades being dedicated to future 
production. Until reserves or mineralized material are actually mined and 
processed, the quantity of reserves or mineralized material and grades must be 
considered as estimates only. In addition, the quantity of reserves or 
mineralized material may vary depending on metal prices. Any material change in 
the quantity of reserves, ore grade or stripping ratio may affect the economic 
viability of the Company's properties. In addition, there can be no assurance 
that mineral recoveries in small-scale laboratory tests will be duplicated in 
large tests under on-site conditions or during production. 
 
 
Dependence on Key Personnel 
 
 
The Company is dependent on a relatively small number of key personnel the loss 
of any one of whom could have an adverse effect on the Company. In addition, 
while certain of the Company's officers and directors have experience in the 
exploration and operation of gold, diamonds and bauxite producing properties, 
the Company will remain dependent upon contractors and third parties in the 
performance of its exploration and possible development activities. As such 
there can be no guarantee that such contractors and third parties will be 
available to carry out such activities on behalf of the Company or be available 
upon commercially acceptable terms. 
 
 
Title Matters 
 
 
No assurance can be given that the various governments will not significantly 
alter the conditions of or revoke the applicable exploration or mining 
authorizations or that such exploration and mining authorizations will not be 
challenged or impugned by third parties. In addition, there can be no assurance 
that the properties in which the Company has an interest are not subject to 
prior unregistered agreements, transfers or claims and title may be affected by 
undetected defects. 
 
 
The Ghana mining law entitles the Republic of Ghana to a free 10% carried equity 
interest in all mineral properties in Ghana. Pursuant to the Ghana Mining Law, 
the Republic of Ghana also has an option to acquire, on terms as shall be agreed 
upon between the holder of the mining lease and the government of Ghana or, 
failing such agreement, as determined by arbitration, an additional 20% interest 
in any mineral properties. To the knowledge of the Company, this purchase option 
has never been exercised. There can be no assurance that the government of Ghana 
will not decide to exercise this right in the future or that the price at which 
such option would be exercised would reflect the then current value of the 
property concerned. 
 
 
 
 
 
 
 
 
Repatriation of Capital and Distribution of Earnings 
 
 
Currently there are no significant restrictions on the repatriation of capital 
and distribution of earnings from Ghana to foreign entities. There can be no 
assurance, however, that restrictions on repatriation of capital or 
distributions of earnings from Ghana, Angola and Sierra Leone will not be 
imposed in the future. 
 
 
Tax 
 
 
Amendments to current taxation laws and regulations that alter tax rates and/or 
capital allowances could have a material adverse impact on the Company. The 
Company has a number of subsidiaries and related companies that operate in a 
number of different tax jurisdictions. At present, profits from the Company 
would most likely be generated in Africa and will be susceptible to taxation in 
that jurisdiction, as well as the Isle of Man and Canada. 
 
 
Financial Risk Management 
 
 
The Company's risk exposures and the impact on the Company's financial 
instruments are summarized below: 
 
 
Credit Risk 
 
 
Credit risk is the risk of loss associated with a counterparty's inability to 
fulfil its payment obligations. The Company is not exposed to any significant 
credit risk on its financial assets. The Company's cash deposits have been 
invested with reputable financial institutions, from which management believes 
the risk of loss to be remote. However due to the recent number of bank failures 
and continued losses reported by banking institutions, the Company can only 
continue to monitor its financial institutions by means of stock prices and 
reported financial statements. The Company cannot be assured that the 
institutions will not fail, given the current global economic uncertainty. 
 
 
Management believes that credit risk with respect to accounts receivable is low, 
as they primarily consist of prepaid expenses. As of June 30, 2009, the Company 
had no financial assets that were either past due or impaired. 
 
 
Liquidity Risk 
 
 
The Company's approach to managing liquidity is to ensure that it will have 
sufficient liquidity to settle obligations and liabilities when due. As at June 
30, 2009, the Company had a cash balance of $0.104 million (December 31, 2008 - 
$0.147 million), to settle current liabilities of $8.281 million (December 31, 
2008 - $7.360 million). 
 
 
For the current liabilities, $7.868 million of the balance relates to money 
advanced to the Company by a company controlled by certain insiders of the 
Company. 
 
 
Interest Rate Risk 
 
 
The cash advance from the related party of $7.868 million, is interest bearing. 
Interest is paid at Libor + 2%. The amount of interest charged to the Company to 
June 30, 2009 and 2008 was $0.053 million and $0.122 million, respectively. 
 
 
Foreign Currency Risk 
 
 
The Company's functional and reporting currency is the US dollar, as most major 
expenditures are transacted in US dollars. The Company funds its Canadian 
corporate costs with Canadian dollar currency transactions. For financial 
reporting purposes, the Canadian dollar expenditures are translated to US 
dollars at month-end. Foreign exchange gains and losses are recognized in the 
consolidated statements of loss, comprehensive loss and deficit. Management 
believes the foreign exchange risk derived from currency conversions is 
negligible and therefore does not hedge its foreign exchange risk. The Company 
recognized a $0.012 million loss (2008 - $0.009 million gain) on currency 
translation for the period ended June 30, 2009. 
The Company's operating income and cash flow are also affected by the movements 
in the local currencies in Angola, Ghana, Ireland and Sierra Leone, as a portion 
of the Company's costs are incurred in these currencies. 
 
 
Price Risk 
 
 
The Company's financial assets and liabilities are not exposed to price risk 
with respect to commodity prices. The Company's exploration drill programs are 
carried out by outside contractors. Cost increases for consumables such as fuel 
and drill bits are indirectly passed on to the Company through its contracted 
drill programs. 
 
 
Sensitivity Analysis 
 
 
As of June 30, 2009, both the carrying value and the fair value amounts of the 
Company's financial instruments are approximately equivalent. 
 
 
Management estimates that a plus or minus change interest rates of one 
percentage point would have impacted net loss by approximately $0.07 million for 
the year ended December 31, 2008. 
 
 
The Company does not hold significant balances in foreign currencies to give 
exposure to foreign currency exchange risk. 
 
 
Impairments 
 
 
There has been notable market turbulence worldwide due to the credit crisis and 
potential of a global recession. This has impacted the ability of mining 
companies to secure debt and equity funding or enter into Joint Venture 
arrangements. As the Company is in the exploration stage, it has historically 
relied on equity financing to raise capital and will continue to do so, but this 
ability will be impacted by the current situation, particularly with respect to 
dilution. 
 
 
The world diamond industry was not immune to the global economic turbulence. The 
fears regarding the future of the US economy and other Western markets have 
hindered pricing, consumption and exacerbated the status of small and 
medium-sized diamond mining companies. As a result, mining companies, in 
general, are finding it problematic to finance new exploration projects. 
 
 
Management's reviews the carrying cost of its mineral properties, whenever there 
is an event or circumstance that indicates that the assets carrying amount may 
not be recoverable. The current market conditions led to a fall in the Company's 
share price and therefore, a decline in the Company's market capitalization, 
which is currently lower than the book value of the capitalized mineral 
properties. 
 
 
These factors combined, provide an indicator that the mineral properties may be 
impaired. As such management has conducted an impairment test on all properties 
for the period ended June 30, 2009. 
 
 
During the quarter ended June 30, 2009, the management of the Company decided to 
write off all expenditures on the Kimberlite diamond property, Angola, in the 
sum of $7.183 million due to the extraordinary challenging times for the diamond 
industry and the global economic crisis together with concerns over the 
commercial viability of the mineral deposit which is dependent on a number of 
factors together with concerns over the particular attributes of the deposit, 
such as its size, grade and proximity to infrastructure. As the alluvial licence 
expired on February 7, 2009, the Company has written off all expenditures in the 
accounts to December 31, 2008, on this licence in the amount of $5.361 million. 
Management considers that the expected future cash flows from the other 
properties exceeds the current carrying value and that they are not impaired at 
this time. 
 
 
There is a risk that in the future, that the continuing unfavorable trends on 
commodity prices, worsening market conditions or the inability to raise funds 
could result in an impairment to the carrying value of the Company's mineral 
properties, which would be recorded as an impairment in the financial 
statements. 
 
 
Going Concern 
 
 
The financial statements of the Company have been prepared on the basis that the 
Company will continue as a going concern which presumes that it will be able to 
realize its assets and discharge its liabilities in the normal course of 
business. The financial statements do not include any adjustments that might be 
necessary if the Company is unable to continue as a going concern. If management 
is unsuccessful in securing capital, the Company's assets may not be realized or 
its liabilities discharged at their carrying amounts and these differences could 
be material. 
 
 
Outlook 
 
 
The Company will continue to focus its efforts to secure sufficient capital to 
meet it obligations. Future cash flow from the 2% net smelter return royalty on 
the Ntotoroso gold property in Ghana will provide funds with which to evaluate 
new mining opportunities. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCDGGMRGLLGLZM 
 

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